Were customized television and radio audience-survey reports taxable when delivered on paper or other tangible media?

Plain-English summary

Customized audience-survey reports were nontaxable services even when delivered on paper or other tangible media.

The station bought research, compilation, and customized demographic data—not the paper. Audience measurement was not one of the taxable services enumerated in La. R.S. 47:301(14).

Why the true object was a service

Survey companies contacted viewers and listeners, analyzed preferences and patterns, and prepared reports for a station's requested market, demographic, age group, geography, or time period.

The paper's value was negligible compared with the work and information. The reports remained confidential, were licensed rather than transferred as unrestricted property, and had an estimated useful life of no more than 90 days. A destroyed report could likely be replaced at little or no added charge.

Generic publications were different

A generic publication reproduced without modification was tangible personal property. Like a book, the publication itself had intrinsic value and required payment of the full price to replace.

Vendor's tax on delivery materials

Although the customer did not owe tax on the customized survey service, the service provider had to pay sales or use tax on the cost of materials transmitted to the customer.

Common questions

Q: Did paper delivery make a custom survey taxable?

A: No.

Q: Did electronic delivery control the result?

A: No. The ruling focused on the transaction's true object rather than the delivery method.

Q: Were generic off-the-shelf publications also nontaxable?

A: No. The ruling treated them as taxable tangible personal property.

Q: Did the survey vendor owe tax on paper or other materials it used to deliver the report?

A: Yes, on the cost of materials transmitted to the customer.

Citations and references

• La. R.S. 47:301(14) — enumerated taxable services
• LAC 61:III.101.C — Revenue Ruling authority and reliance statement

Source

• Landing page: Louisiana Department of Revenue Policies
• Original PDF: LA Revenue Ruling 02-012

Original ruling text

Revenue Ruling No. 02- 012
August 30, 2002
Sales and Use Tax
Sales and Use Tax Treatment of Audience Survey Information
The purpose of this Revenue Ruling is to discuss the applicability of the Louisiana sales and use tax to
television and radio listener surveys that are supplied to customers in the form of tangible personal property.
Issue
Audience survey reports can be transmitted to customers electronically, in printed form, or by other
means. Questions arise over whether the audience survey report delivered in a printed or electronic
format represents the sale of tangible personal property or the providing of a service in which
tangible personal property is used as a medium to transmit the results.
Description of Audience Survey License Agreements
Audience survey reports assist television and radio stations to determine audience interest in
different television and radio broadcasts within their markets. The stations use the reports to solicit
advertising sales for broadcasts. The broadcast stations request information on a particular
demographic of viewers or listeners, such as information on patterns of viewers or listeners in a
particular geographical region, in a particular age category, or within a certain time period.
In order to provide reports with the information that the stations have requested, the audience
survey companies contact television viewers and radio listeners to learn about their viewing and
listening preferences and patterns. The companies compile this research and prepare customized
reports for their clients about the size of the target market and other demographic audience
information. Due to the changing preferences and makeup of audiences, the useful life of surveys is
estimated to be no more than 90 days.
The audience survey reports to television and radio stations are subject to restrictive licensing
agreements under which the reports remain confidential and the property of the audience survey
company. Stations and their employees are prohibited from disclosing the information in these
reports to outside parties except for promotional purposes. Additionally, the stations must identify
the audience survey company when distributing ratings information to prospective advertisers or in
promotional literature.
Classification as a Service
When determining if transactions are subject to the sales and use tax, each transaction must be
considered separately. In the situation of audience surveys supplied on tangible media, the overall
analysis indicates that the true object in providing the reports is a service.
The factors considered in determining that the true object of this transaction is a service are that the
value of the paper provided to the customer is negligible in comparison to the substantial services
that were provided in preparation of the customized reports and that there is a distinction between
the value of the intangible content of the report and the tangible medium on which it is transferred.
In seeking the audience survey reports, the stations are not interested in the intrinsic value of the
paper itself. If the paper were destroyed, the stations could request copies of the reports, likely at no
additional charge to the station. Instead, the stations are interested in the data that the reports
provide.
In this regard, the reports provided in tangible form are analogous to a will or contract provided by
an attorney. The traditional treatment of that transaction is that the attorney is providing services
that are eventually reflected in the paper documents. However, the true object is not the paper on
which the will is typed. Rather, the true object is the skill and expertise of the attorney in crafting a

Revenue Ruling No. 02 - 012
Page 2 of 2
document that best serves the client’s needs. In the same manner, the audience survey reports
provided in tangible form reflect the skill and expertise of the audience survey companies and any
tangible documents provided to the customer are insignificant to the services provided.
Similarly, the intangible content of the reports, although transmitted on a tangible medium, have a
value separate and apart from the tangible media on which they are transmitted. The customer seeks
the data, not the tangible personal property upon which the survey results are transferred. The
tangible personal property is merely a delivery mechanism to send the findings to the stations.
Sales and Use Tax Consequences of being classified as a Service
The above analysis shows that the true object of these audience survey reports is the performance of
a service for the benefit of customers. Only eight services are subject to Louisiana sales and use tax,
as provided in La. R.S. 47:301(14). The service of measuring the preferences of viewer or listeners
in a market and creating reports is not one of these enumerated services, thus these transactions are
not subject to the sales and use tax imposed on services.
Comparison to the sale of generic marketing publications
In some cases, survey companies sell generic publications that are reproduced without modification.
These transactions involve the sale of tangible personal property where the true intent of the buyers is to
acquire the publications themselves and not the providing of a nontaxable service. Generic publications
have an intrinsic value in and of themselves as with the purchase of a book. If a book is lost or
destroyed, the purchaser would have to pay the full price of the book to replace it. Similarly, in the case
of a generic publication, the purchaser would have to pay the full price of the publication to replace it.
Conversely, in nontaxable services, the cost of replacing the tangible personal property would be
negligible compared to the original cost of the service.
Conclusion
Louisiana Sales Tax law imposes tax on the sale, use, or rental of tangible personal property and
certain enumerated services. Custom prepared audience surveys are not considered to be the sale of
tangible personal property nor is the providing of audience survey information to radio and
television stations one of the taxable services under La. R.S. 47:301(14). Therefore, audience
surveys are not subject to Louisiana Sales and Use Tax even when transmitted in the form of
tangible personal property. However, as the provider of a nontaxable service, the vendor is required
to pay sales or use tax on the cost of any materials transmitted to the customer.
For more information regarding this topic, taxpayers should contact the Policy Services Division at
225.219.2780.
Cynthia Bridges
Secretary
By: ________
Christina L. Fletcher
Attorney
Policy Services Division

J. A. Cline, Jr., CPA
Tax Research Analyst
Policy Services Division

A Revenue Ruling is written to provide guidance to the public and to Department of Revenue employees. It is issued
under Section 61:III.101.C of the Louisiana Administrative Code to apply principles of law to a specific set of facts. A
Revenue Ruling does not have the force and effect of law and is not binding on the public. It is a statement of the
department's position and is binding on the department until superseded or modified by a subsequent change in statute,
regulation, declaratory ruling, or court decision.